Advantages Of Having a Tax-Free Savings Account


Posted May 31, 2022 by einsuredca

Tax-free savings accounts are useful investment options for Canadian citizens where they can earn tax-free income
 
Tax-free savings accounts are a relatively new concept for investment. It provides investors and working professionals with an opportunity to earn investment income at relatively low risk. A savings account can help you accomplish a number of purposes such as reconstructing your house, buying a new house, going for a new dream vacation, etc. Savings accounts are like readily available cash funds that you can utilize to fulfill your dream projects. Situations like family emergencies and hospitalization or medical expenses can easily be covered by having a savings account of your own. The tax-free savings account concept was introduced by the government of Canada in the year 2009 to help Canadian citizens and residents to save more on their earnings. Tax-free savings accounts can provide Canadian citizens with multiple benefits and this article will highlight some of the key advantages of these accounts.

Tax-free savings accounts provide professionals and retired persons with an opportunity to earn more on their investments without giving any tax to the government. If you have a savings account in Canada, you will be able to earn on any interests, capital gains, or share dividends completely tax-free. Whatever the investment money you will earn through your savings account is not subject to tax. Moreover, having a savings account gives you the flexibility and freedom to withdraw your hard-earned money anytime you want. You can use that money to fulfill any purposes without getting stressed out by the fact that you will have to give tax on your account money. If you have any unused contributions in your savings account, you can use them freely in the next year. Having a savings account also allows you to contribute to your spouse’s account, however, you should remember that the total contribution must not exceed the maximum contribution allowed by the government.

Tax-free savings accounts have some additional benefits as well. For instance, if you enjoy any kind of government benefits, your contribution to your savings account does not affect your government benefits. Whatever income you receive from your savings account will not make any impact on your eligibility to receive government benefits such as income-tested benefits, guaranteed income supplements, child tax benefits, old age security benefits, or any other benefits. The logic for having a savings account is quite simple, you need to keep more in your accounts to grow your money. One of the major advantages of these accounts is that there is no upper limit on contributions to your savings account. One can contribute and earn income up to 80 years of his/her age.

For more details, visit : https://www.einsured.ca/tax-free-savings-account-tfsa/
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Tags taxfree savings account
Last Updated May 31, 2022